Bullish option positions collected big winnings in Caesars Entertainment today.
Last Thursday, Investitute’s market scanners showed that 5,000 Weekly $12.50 calls that expire on Oct. 27 were purchased in one print for $0.15 with shares at $12.15. This was clearly a new position, as open interest in the strike was only 1,012 contracts before the trade occurred.
Those calls rose to $0.45 this morning, tripling in value after just three sessions. The stock was up just 4.5 percent at the same time, showing how quickly options can far outperform gains in their underlying shares.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
CZR popped 2.46 percent to $12.50 today. Barron’s published a positive note about the casino operator over the weekend.